The US state of New York is seeking to tax the sales and transfers of crypto and non-fungible tokens (NFTs) under a bill introduced in the state’s Assembly.
Assembly Bill 8966, introduced on Wednesday by Democratic Assemblymember Phil Steck, would add a 0.2% excise tax on “digital asset transactions, including the sale or transfer of digital assets.”
The bill, if passed, would take effect immediately and apply to all sales and transactions starting Sept. 1.
If enacted, the bill could bring in significant tax revenue for the state, as New York City is the world’s largest financial and fintech hub — industries that have embraced crypto by buying up billions worth of tokens or offering crypto-based financial products.
Crypto tax to fund school substance abuse programs
Steck’s bill denotes that the funding from the crypto tax sales should be earmarked to expand a “substance abuse prevention and intervention program to schools in upstate New York.”
The bill clarifies that it would change the state’s tax laws, and the new levy would apply to “digital currencies, digital coins, digital non-fungible tokens or other similar assets.”
There are multiple steps to go before the bill becomes law. It will need to pass an Assembly committee before being put to a vote before the full Assembly, it will then be sent to the Senate and, if approved, sent to the governor who can pass or veto the bill.
State taxes on crypto widely vary
In the US, the federal and state governments can both levy taxes, which leads to states lowering — or in the case of Texas, completely scrapping — corporate and income taxes in the bid to attract companies looking to minimize their tax bill.
Most states do not have guidance on how their tax authorities treat crypto, while others, such as California and New York, treat crypto as cash, while states like Washington tax-exempt crypto, according to Bloomberg Tax.
Crypto tax laws by state as of July 2022. Source: Bloomberg Tax
New York home to crypto bigtimers
New York, more specifically New York City, has long been home to crypto industry heavyweights due to its status as a global finance center.
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Stablecoin issuers Circle Internet Group and Paxos, along with crypto exchange Gemini and analytics firm Chainalysis, are headquartered in the city, while many other crypto firms operate offices there.
New York was the first US state to launch a comprehensive regulatory regime for crypto, introducing the BitLicense in 2015 — a divisive permit that caused many crypto companies to leave the state as it was supposedly too burdensome, while others, such as Circle, Paxos and Gemini, embraced the chance to be regulated.
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